Northern Rock uses taxpayer’s money to revive mortgage lending
The nationalised bank, Northern Rock, is apparently using taxpayers’ money to revive its mortgage lending operations, according to recent reports.
The bank fell into trouble in the latter part of 2007, becoming one of the first major victims of the global credit crunch in the UK after it became the victim of the first run on a British bank in around one hundred and fifty years. It was then nationalised early last year in a government rescue bid.
Last year the bank announced that it was trying to wind down its mortgage lending operations. However, the government is desperate to try and boost mortgage lending activity to try and revive the housing market and economy, and the Rock has now reversed its decision and will be using government funds to increase mortgage lending activity instead. The bank is also set to report losses of £1.4 billion for 2008.
The government is set to provide Northern Rock with an additional £10 billion injection from the public purse to enable this increase in mortgage lending.
An official from Northern Rock said: “This is good news for customers of Northern Rock and for consumers generally, who will benefit from an increase in mortgage availability.”
The bank added: “The new lending proposition means that the company’s existing mortgage customers will not be actively encouraged to leave when their mortgage deal matures and they will have more choice.”
Chancellor Alistair Darling said that Northern Rock “repaid about £18bn of the loan the government made, and I said in January this year that because of the problems the mortgage market faced, instead of looking to wind down its business, it would be better for Northern Rock to maintain lending.”
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It’s a tactic doomed to failure whilst NR keep their SVR artificially high !!! Nearly double mainstream providers who have had more of the governments money and support.
Ministers are culpible in this tactic. Typical New Labour all talk no action
Paul